A subsidiary has (1) a convertible preferred stock and (2) a convertible bond. How are these items factored into the computation of earnings per share for the parent company?
Answer to relevant QuestionsWhy might a subsidiary decide to issue new shares of common stock to parties outside the business combination?Jordan, Inc., owns Fey Corporation. For 2011, Jordan reports net income (without consideration of its investment in Fey) of $200,000 and the subsidiary reports $80,000. The parent had a bond payable outstanding on January 1, ...Aaron owns 100 percent of the 12,000 shares of Veritable, Inc. The Investment in Veritable account has a balance of $588,000, corresponding to the subsidiary’s unamortized acquisition-date fair value of $49 per share. ...Several years ago Absalom, Inc., sold $800,000 in bonds to the public. Annual cash interest of 8 percent ($64,000) was to be paid on this debt. The bonds were issued at a discount to yield 10 percent. At the beginning of ...Garfun, Inc., owns all of the stock of Simon, Inc. For 2011, Garfun reports income (exclusive of any investment income) of $480,000. Garfun has 80,000 shares of common stock outstanding. It also has 5,000 shares of preferred ...
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